WGU C213 PA & OA STUDY GUIDE | 2026 UPDATE |
QUESTIONS AND ANSWERS WITH COMPLETE
SOLUTION
What does accounting focus on? Answer - The impact a business's activities
have on its overall financial performance
Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time? Answer -
Statement of cash flows
Which users would have a primary concern with an organization's ability to
provide healthcare benefits? Answer - Employees
Which benefit does a corporation gain by following Generally Accepted
Accounting Principles (GAPP)? Answer - An increase in its compatibility to
other companies
Which body regulates a certified public accounting firm's audit practices when
the firm is auditing a large publicly traded company? Answer - The Public
Company Accounting Oversight Board (PACOB)
What has had the most significant impact on Accounting practices? Answer -
Information technology
,What two items of information are revealed on the balance sheet? Answer -
Ownership and Debt
Which term is defined as the residual in the net assets of a company? Answer -
Owners equity
Which situation should result in revenue recognition on the income statement
for the year ending 12/31/14 if the firm is using accrual accounting? Answer -
In 2014, a company provides services to a customer for which cash will be
collected the next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? Answer - Cash from
financing activities
Where would an investor find a summary of a company's significant accounting
policies? Answer - In the notes to financial statements
Which assurance does an external audit report provide for its readers? Answer
- The company's financial statements fairly reflect its financial position
Information that can be verified Answer - Reliable
Information having to do with the matter at hand Answer - Relevant
Information that is important enough to make a difference Answer - Material
Information related to recognizing losses as they occur Answer - Conservatism
, What is consistent with a continual decline in gross profit if the firm's cost of
goods sold remains the same? Answer - Continual decrease in sales
Which form of debt should be reported in the long-term liability category?
Answer - Notes payable expected to be paid in 18 months
Which values affect the measurement of net income? Answer - Operating
expenses &
Ordinary gains and losses
Which items' subtotals are included in a multi-step income statement? Answer
- Gross profit &
Income from operations
What is a common category in a statement of cash flows? Answer - Cash from
investing activities
Which cash flow category would include "cash received from investors"?
Answer - Cash from financing activities
Which item is an investing activity? Answer - Cash payments for purchase of
plant assets
What impact does the sale of equipment have on the statement of cash flows?
Answer - Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements
of cash flow? Answer - The indirect method is more popular among large U.S.
companies
QUESTIONS AND ANSWERS WITH COMPLETE
SOLUTION
What does accounting focus on? Answer - The impact a business's activities
have on its overall financial performance
Which report summarizes cash collections and cash expenditures from
operating, investing, and financing activities over a period of time? Answer -
Statement of cash flows
Which users would have a primary concern with an organization's ability to
provide healthcare benefits? Answer - Employees
Which benefit does a corporation gain by following Generally Accepted
Accounting Principles (GAPP)? Answer - An increase in its compatibility to
other companies
Which body regulates a certified public accounting firm's audit practices when
the firm is auditing a large publicly traded company? Answer - The Public
Company Accounting Oversight Board (PACOB)
What has had the most significant impact on Accounting practices? Answer -
Information technology
,What two items of information are revealed on the balance sheet? Answer -
Ownership and Debt
Which term is defined as the residual in the net assets of a company? Answer -
Owners equity
Which situation should result in revenue recognition on the income statement
for the year ending 12/31/14 if the firm is using accrual accounting? Answer -
In 2014, a company provides services to a customer for which cash will be
collected the next year (2015).
Which category on the statement of cash flows summarizes cash receipts and
payments to owners and creditors of the company? Answer - Cash from
financing activities
Where would an investor find a summary of a company's significant accounting
policies? Answer - In the notes to financial statements
Which assurance does an external audit report provide for its readers? Answer
- The company's financial statements fairly reflect its financial position
Information that can be verified Answer - Reliable
Information having to do with the matter at hand Answer - Relevant
Information that is important enough to make a difference Answer - Material
Information related to recognizing losses as they occur Answer - Conservatism
, What is consistent with a continual decline in gross profit if the firm's cost of
goods sold remains the same? Answer - Continual decrease in sales
Which form of debt should be reported in the long-term liability category?
Answer - Notes payable expected to be paid in 18 months
Which values affect the measurement of net income? Answer - Operating
expenses &
Ordinary gains and losses
Which items' subtotals are included in a multi-step income statement? Answer
- Gross profit &
Income from operations
What is a common category in a statement of cash flows? Answer - Cash from
investing activities
Which cash flow category would include "cash received from investors"?
Answer - Cash from financing activities
Which item is an investing activity? Answer - Cash payments for purchase of
plant assets
What impact does the sale of equipment have on the statement of cash flows?
Answer - Increase in cash from investing activities
What is known about the direct and indirect methods of preparing statements
of cash flow? Answer - The indirect method is more popular among large U.S.
companies
